Inflation eases
Headline inflation came in a bit lower than expected at just 0.2 per cent for the September 2024 quarter, taking the annual figure down to 2.8 per cent, according to the latest ABS figures.
That's the lowest annual figure figure since March 2021, with further declines to come.
There was a bit of inflation on alcohol and tobacco - and some services inflation for rents, insurance, and childcare costs - but not a whole lot else.
Source: ABS
As expected, electricity subsidies helped to reduce the headline figure significantly.
The trimmed mean result for the quarter was 0.78 per cent, taking the annual reading down from 4 per cent to 3½ per cent, essentially in line with the Reserve Bank's forecasts.
Source: ABS
Naturally, analysts will ask what happens when the power bill subsidies are taken away, but 2025 is an election year, and most likely they probably aren't going anywhere fast.
With oil prices trading at under $67.50, we'll likely get some further disinflation in fuel prices in the December quarter too.
Source: ABS
The monthly inflation indicator was also soft and dropped all the way down to 2.1 per cent over the year.
Source: ABS
Overall, Australia's inflation trends haven't been much different to elsewhere...just a little lagged.
The wrap
Markets weren't much moved by this, with the 3-year bond yield still trading at a bit under 4 per cent.
This was probably a fair set of numbers from the perspective the central bank, with interest rates likely to remain on hold until next year (perhaps pencil in a first rate cut for February 2025).
The government will be a bit twitchy as we head through into an election year with cost of living pressures front of mind for the electorate, and elevated mortgage rates killing off the prospect of the pledged new housing supply.
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